Without question, some renewable energy projects have gotten off to a rocky start. The headwinds have been many: inflation, high interest rates, supply-chain disruptions, expensive infrastructure upgrades, and governmental delays, to name just a few.

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But wasn’t it none other than boy-wonder Elon Musk that said, “When you first start a company, there’s lots of optimism and things are great. Happiness, at first, is high. Then, you encounter all sorts of issues and happiness will steadily decline and you’ll go through a whole world of hurt. Eventually, if you succeed, you will finally get back to happiness.” He also said, “Failure is an option here. If things are not failing, you are not innovating enough.”

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No doubt Donald Trump getting reelected will make things in the green energy sector rockier. Within days of his second inauguration, he ordered federal agencies to stop issuing leases and permits for all new wind projects and placed a freeze on renewable energy projects on public lands. He defined energy to include oil, coal, nuclear, natural gas, geothermal, and hydropower – excluding wind turbines and solar panels – and told agencies to stop distributing money that Congress had appropriated for things like charging stations along highways (which we're pretty sure is unconstitutional).

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So, yes, the next four years may slow our roll, but we have to keep going. This country has been working on this for years, and has made tremendous progress. Forget fires, floods, emission levels, global climate targets, or even the destruction of important natural systems. We have to keep going because we cannot rely on fossil fuels forever. We just can’t. We have to set these things in motion to protect future generations of Americans.

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Plus, we cannot get outplayed here by China and the rest of the globe. The world now invests almost twice as much in clean energy as it does in fossil fuels. In 2024, global investment in clean energy technologies and infrastructure hit $2 trillion. Investment in clean energy has surged since 2020, and spending on renewable power, grids and storage is now higher than global spending on oil, gas, and coal.

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The International Energy Agency (IEA), an intergovernmental organization established within the Organization for Economic Co-operation and Development says that “over the next five years, several renewable energy milestones are expected to be reached. In 2025, renewables-based electricity generation is set to overtake coal-fired generation. In 2026, wind and solar power generation are each poised to surpass power generation from nuclear. Then, in 2029, electricity generation from solar PV is set to surpass hydropower, becoming the largest renewable power source globally – with wind-based generation expected to surpass hydropower in 2030.”

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There are three pieces of legislation that were passed in the Biden administration that dedicate money to help fight climate change: the Bipartisan Infrastructure Law allocates money to enhance the power grid, buy low emission public transportation, and build a national network of electric vehicle chargers; the CHIPS Act; and the Inflation Reduction Act (IRA) appropriates money to reduce greenhouse emissions and promote green energy technologies.

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These are far from perfect, but they are what we got so now we have to make sure we get the biggest bang for our buck. Already, around $61 billion of IRA funding has been spent, and tax credits from the legislation have sparked $215 billion in clean energy investment that could be worth $350 billion over the next three years.

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Here’s other good news! In 2023, clean energy jobs accounted for more than half of new energy sector jobs and is growing at a rate more than twice as large as that for the rest of the energy sector and the U.S. economy overall. 

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The Biden administration committed a tremendous amount of money to this, and we can certainly have a conversation about that. But I don’t want to hear a word about it from anyone in the oil and gas industry. According to the International Monetary Fund (IMF), the United States gave $760 billion in total fossil fuel subsidies in 2022 alone (second only behind China) …and just think how many freak’n years we’ve been doing this!​ < Note: There are two kinds of subsidies, and this number includes both. Explicit subsidies occur when consumer prices are less than the market value of the fuel itself (adjusted for transport costs and value-added tax, or VAT). Implicit subsidies occur when the retail price fails to include external costs, including the standard consumption tax and adverse effects on society (like greenhouse gas emissions, damage to consumers’ health, etc.). >

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Not only can we not give the fossil fuel industry one more dime in subsidies, but we also need to start significantly scaling back the astronomical subsidies they already get. The global oil and gas industry has made $2.8 billion a day in pure profit for the past fifty years – translating to $52 trillion in profits and 1 percent of all the wealth in the entire world.

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ExxonMobil is the largest energy company in the U.S. based on revenue and generated almost $345 billion in revenues in FY2023. The U.S. energy sector has a market cap of $3.78 trillion and total revenue of $3.27 trillion. How in the hell do subsidies make sense?

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The subsidies for green energy R&D are appropriate because these are new ventures that need a kick-start to get off the ground. But fossil-fuel based companies have had decades to pull themselves together. They need loans, fine. But they need TO PAY US BACK before they distribute one dime to shareholders. On a side note, it’s so funny to hear oil and gas guys bash “socialism” and “welfare” for regular people – until, of course, socialism and welfare benefit them. That is exactly what this is and it’s beyond ridiculous. Check yourself, boys.
 

The entire world is making amazing progress, and we appreciate the urgency to introduce renewable energy sources as quickly as possible. However, it’s a good thing this is a process because these new technologies and their government oversight need time to properly evolve. Subsidies and tax credits can be useful in terms of research and development, but they can also encourage quantity over quality. For example, depending on how they are generated, biofuels can emit as much pollution as fossil fuels. There is no real reduction in carbon dioxide emissions if coal is used to convert wheat into ethanol or if rapeseed is grown using fertilizer made from natural gas. It’s sometimes difficult to distinguish good biofuel from bad, but often they both receive the same breaks from the government.  

 

Subsidies also tend to make companies less mindful of long-term strategy and costs. The American Recovery and Reinvestment Act of 2009, the stimulus package passed by Congress after the 2007-2009 Financial Crisis, offered to pay wind-farm developers up to 30 percent of the capital investment costs of new wind projects. However, as subsidies increased, thoughtful due diligence at times decreased. After the federal money was offered, for example, wind-power projects were built in areas with 16 percent less wind than a decade before. That doesn’t sound like the smartest move. 

 

​There are broader issues to consider as well. In a 2005 energy bill, the U.S. government mandated the use of ethanol in gasoline and, two years later, increased the original quotas. These government mandates and their corresponding subsidies unleashed a construction frenzy to build ethanol plants. Not long after, it became clear that the boom in American ethanol was a major contributor to a severe spike in worldwide food prices, which had risen 75 percent since the U.S. energy legislation passed (ethanol is generally made from biomass like sugar or corn). This was devastating for poor countries, where people could barely keep food on the table under normal conditions. Consequently, there were food riots in Mexico, Egypt, Haiti and many other countries.

 

​Very little concern was shown when the international community was damaged by rising food prices, but that changed when it hit closer to home. Elevated corn prices eventually came back to bite American ethanol producers in the britches because their product was now much more expensive to produce. Shaken by record high prices, many ethanol producers hedged their future corn price to protect against additional increases. However, banner harvests and a significant drop in commodity prices across-the-board led to a nosedive in corn prices, leaving the ethanol producers with a $7 a bushel price tag in a $4 a bushel market.  

 

These factors, combined with the economic fallout from the 2007-2009 Financial Crisis, left the industry crippled. Many producers filed for bankruptcy protection and construction plans for new ethanol plants were postponed or abandoned entirely. 

 

As we know, good intentions can have unintended consequences if we don’t pay attention. #TheButterflyEffect